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    k-1 in an IRA

    My client received a k-1 for an investment which i believe is from an oil company. This is inside his ira. My understanding is this is a not a reporting event since it is in his ira. My guess is there are investors that own a piece of this investment in a regular investment account therefore the company issues k-1s. Any thoughts?

    #2
    The trustee

    of the IRA will need to deal with the K1 information. It is sent to your client for information purposes.

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      #3
      It may be a reporting, and taxable, event on if the UBTI exceeds $!,000 in which case a Form 990-T will have to be filed.

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        #4
        Why would a 990 need to be filed? I've never heard of that requirement in regards to IRA's.

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          #5
          Originally posted by ardi600 View Post
          My client received a k-1 for an investment which i believe is from an oil company. This is inside his ira. My understanding is this is a not a reporting event since it is in his ira. My guess is there are investors that own a piece of this investment in a regular investment account therefore the company issues k-1s. Any thoughts?
          If you will look at the K-1 closely, you will see it does not have the client's SSN on it. It has the EIN of the entity and has been filed with the IRS under that #. I hate these things. You have to be careful not to overlook that. And it confuses the devil out of the taxpayer.

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            #6
            Your client is supposed to send the K1 to the broker in the event the UBTI is over $1000 (box 20V) on the K1. While the broker is required to file the 990-T I understand this year that some brokers are sending the 990 to the client to prepare and have them return to the broker for filing.

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              #7
              You have got to be kidding.

              Comment


                #8
                Originally posted by taxdude71 View Post
                Why would a 990 need to be filed? I've never heard of that requirement in regards to IRA's.
                An IRA is most likely to be taxed when it earns unrelated business taxable income (UBTI). The UBTI rules apply to all qualified retirement plans, not just traditional IRAs. If an IRA earns UBTI exceeding $1,000 it must pay income taxes on that income. The IRA might have to file Forms 990-T or 990-W. It also must pay estimated income taxes during the year if the UBTI exceeds $500.

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                  #9
                  Here's a discussion related to this issue from 3+ years ago. There are others - just search on "UBTI".

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                    #10
                    @Burke

                    you are right. there are two k1s and under part two identifying number, neither one has their ss numbers. in box F it reads:
                    ira FBO and then his name
                    abc company llc(example)
                    roth account
                    my clients address

                    second one reads:
                    edward jones co custodian
                    fbo, then my client's name
                    address.

                    btw, they are both losses.

                    Comment


                      #11
                      Hahahaha

                      Originally posted by Burke View Post
                      You have got to be kidding.
                      This struck me as hilarious. I am crying over here.
                      Last edited by RitaB; 03-05-2012, 01:11 PM.
                      If you loan someone $20 and never see them again, it was probably worth it.

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